There are many phrases that, when associated with taxes, bring about nightmarish thoughts in a taxpayer. Penalties and interest are two of these phrases, among many, that can cause people to think that their tax filing is in a lot of trouble. Knowing what these terms mean in relation to taxes is very important, so let's talk about penalties, interest and taxes.
First of all, penalties and interest will not apply in years where you are owed a refund. If you owe money to the Internal Revenue Service, though, then penalties and interest can be applied to your filing when you fail to pay. Depending on the situation, the financial consequences will vary.